Nature finance is the next wave

Accurately measuring and reporting nature-related financial risks forms a strong foundation for safeguarding biodiversity, writes Simon Zadek, executive director, NatureFinance (formerly the Finance for Biodiversity Initiative).

Managing nature-related financial risks today remains a niche art, practised mainly by those investing in the nature-sensitive food sector. But this art is moving into the scientific mainstream. The shift is thanks to the efforts of many, especially those championing the Taskforce on Nature-related Financial Disclosures. Alongside this are moves to bring nature to the attention of central banks and financial regulators, the advancement of specialised due diligence mechanisms concerning issues such as deforestation and progress in making nature crimes more salient in efforts to stem money laundering.

Effectively measuring, managing and reporting on nature-related risks is not a silver bullet in safeguarding nature. That said, it will prove hard to advance other, perhaps more catalytic initiatives, without these foundations in place.

NatureFinance is playing its part at the forefront of these developments. Co-chairing TNFD’s formative technical work helped to establish its ambitious conceptual and technical foundations. We provided additional technical support in participating in the rapid development of the first beta release, and across TNFD’s work in our role as senior adviser to its co-chairs and secretariat. We have sought to commission and release related work on the climate-nature nexus, including the first piece to map out the need and potential for building this nexus into transition pathways and long-tail risk analysis.

NatureFinance continues to work closely with TNFD. Our work includes a piece on the social and economic equity and rights aspects of nature-related risks and disclosure requirements, and support for the TNFD’s early-stage, cutting edge work on nature-related scenarios. Moreover, we continue to support related work and groups. This includes our engagement with the Zurich-based ETH in advancing high-quality biodiversity data, and our support for Global Canopy and the Green Digital Finance Alliance in advancing their work on the use of biodiversity data for tracking supply chain impacts and advancing methods for nature-friendly consumer practices.

Last but not least, we have helped to channel financial resources into TNFD and related work. As the strategic partner of the Children’s Investment Fund Foundation we made a contribution of $1m to the TNFD’s core operations. We are also working with other foundations in helping to design related grant windows, such as the Swedish Mistra Foundation, and collaborating in grant programming of other funders, such as the UK’s Natural Environment Research Council.